A New Day for Export Initiatives in the 2011 Budget?

February 8, 2010

In his State of the Union address, President Obama announced the creation of a “National Export Initiative,” as part of an ambitious goal of doubling exports in five years. (The real value of exports typically double every 13 years, and a five-year doubling hasn’t happened since the years immediately following World War II, an anomalous period to be sure). However, he was not clear on how this initiative will differ from long-standing export promotion activities--many of which are handled by the International Trade Administration (ITA), the Department of Agriculture, and the Export-Import Bank, as a previous post discussed.

For the fiscal year 2011 budget, the administration has proposed to increase funding to ITA by 20 percent to $534 million. Of this, according to the more detailed appendix, they call for no less than $258 million to go directly towards export promotion through the Foreign Commerce Service. That would be only a very modest increase from 2009 and 2010 when the amounts were $248 million and $253 million respectively. But the Department of Commerce has now posted what is presumably the preferred allocation: They are calling for $321 million to be spent on trade promotion--which would be an increase of almost a quarter--and the addition of 97 full-time employees.

The new Commerce document also provides some much-needed elaboration on what the National Export Initiative (NEI) would involve. The NEI would reportedly increase the overseas presence of Commercial Service liaisons, support legal challenges to trade violations, boost public-private partnerships, and provide market intelligence.

In addition to budget changes, the president called for “strengthening” trade agreements, the better enforcement of current rules, and reviewing regulations on the exports of militarily relevant equipment. These are all fine ideas. White trade agreements between two countries aren’t as useful as broader multi-national agreements, there is strong evidence that trade agreements increase trade flows, and as the International Trade Administration points out, U.S. trade is more balanced when conducted under free trade agreements. So while it remains to be seen whether or not the administration will actually promote exports with more alacrity and success that its predecessors, it has certainly signaled that it is an important goal, while making some initial and welcome strides towards achieving some measure of success. It is doubtful that even a more aggressive stance would lead to the doubling of exports by 2015, but no one ever accused the Obama administration of selling itself short.